Canada pays a percentage, not a fortnight
This is the thing that makes the Canadian version of this question different from every other market's. Britain, Australia and the United States all express annual leave as time. Canada expresses it as both: an entitlement in weeks, and a payment calculated as a percentage of the gross wages you earned.
| After | Vacation | Vacation pay |
|---|---|---|
| 1 completed year | 2 weeks | 4% of earnings |
| 5 consecutive years | 3 weeks | 6% of earnings |
| 10 consecutive years | 4 weeks | 8% of earnings |
Those two things are not the same, and the difference between them is where all the value in this page sits.
The percentage runs on everything, including your overtime
For vacation purposes, wages are defined as including every form of payment for work performed. Tips and other gratuities are the only stated exclusion.
So overtime is inside the number the percentage comes out of. Work a heavy year and your vacation pay goes up with it, automatically.
Put figures on it. Somebody on $60,000 of salary who earned another $20,000 in overtime has gross wages of $80,000. Two weeks at 4% is $3,200. Two weeks of their base salary would have been $2,308. That is 38.7% more, and it means the two weeks are actually worth 2.77 weeks of base pay.
This is the exact opposite of the Australian rule on identical facts. Australian annual leave is paid at a base rate that explicitly excludes overtime, penalties, allowances and bonuses, which is why Australian awards so often add a 17.5% loading to compensate. Canada does not need a loading, because the overtime is already in the base the percentage runs on.
If you work overtime and a payslip shows vacation pay worked out on salary alone, the number above is what to compare it against. See our Australian annual leave page for the other side of that comparison.
And even with no overtime, the percentage wins
Two weeks out of 52 is 3.846%. The Code gives 4%. Three weeks is 5.769% against 6%, and four weeks is 7.692% against 8%.
Every tier rounds up from the weeks it represents, so 4% of salary is worth about 2.08 weeks of it. That is roughly half a day a year, which is not much money. The principle matters more than the amount: the weeks figure and the percentage figure are not interchangeable, and if a policy quotes you one it is worth checking which.
Staying put is worth real money here
The tiers turn on consecutive years with the sameemployer. Changing job resets you to two weeks and 4%, however long you had been working before.
By ten years the entitlement has doubled, in both time and money: four weeks and 8% against two weeks and 4%. No other market on this site rewards service that way in its statutory minimum. British and Australian entitlements are the same on day one as they are after twenty years, and the American one does not exist at all.
Worth factoring into a job move, and worth knowing that it is one of the few places where employment law itself, rather than an employer's discretion, pays for loyalty.
You cannot bank it
Vacation must begin no later than 10 months after the end of the year of employment it relates to. Where your employer schedules it rather than agreeing it with you, they owe at least two weeks' notice.
That is a genuine structural difference from Australia, where annual leave accumulates indefinitely and long-serving employees can be carrying months of it. Canada makes you take it, broadly inside the following year, which is better for the employee who would otherwise never book anything and worse for the one saving up for something.
You may waive, postpone or split your vacation for a given year of employment. Where it is split, the vacation pay is paid proportionally to the time taken.
On leaving, it is money already earned
Vacation pay owed for any completed year of employment must be paid out within 30 days. Because it is calculated on the wages of a year you have already worked, it is accrued money rather than a benefit you forfeit by resigning.
Who this actually covers, and it is a minority
Everything above is Part III of the Canada Labour Code, which applies to federally regulated employers: banking, telecommunications and broadcasting, interprovincial and international transport, ports and shipping, and federal Crown corporations.
Most Canadian employees are not in that group. They are covered by their own province's or territory's employment standards, which set their own minimums. Those minimums are broadly similar and they are not all identical.
Thirteen provincial and territorial employment standards acts on thirteen separate legislative calendars is not a table one person can keep accurate, and a stale figure on a page about your leave entitlement is worse than no figure. So this page is deliberately and explicitly the federal position, and the first thing it does is say so. If your employer is not federally regulated, your provincial employment standards office is the authority and it is the one to check.
And a union agreement can displace it, on two conditions
A collective agreement can waive these requirements, but only if it both provides rights and benefits equal to or better than the Code and includes a provision for third party settlement of disputes. Both conditions together. A more generous agreement with no third-party dispute mechanism does not displace the Code.
Four markets, four different mechanisms
This page completes the set, and the four are worth seeing together because none of them is a variation on another:
- United Kingdom. 5.6 weeks, and bank holidays may be counted inside it. Paid at a rate averaged over 52 weeks for irregular hours workers.
- Australia. Four weeks, or five for shiftworkers, with public holidays outside it. Paid at base rate excluding overtime, so awards add loading.
- Canada. Two to four weeks by length of service, paid as a percentage of everything you earned, overtime included.
- United States. No federal entitlement at all. Whatever your employer's policy says.
One page with a country dropdown could not ask the right questions for any of them. This one needs gross wages and years of service. The Australian one needs shiftworker status and an award. The American one needs your accrual method, because there is no law to compute from. And the British one needs to know whether your employer counts the bank holidays in.
Common questions
How much vacation am I entitled to under the Canada Labour Code?
Two weeks after one completed year of employment, three weeks after five consecutive years with the same employer, and four weeks after ten. Vacation pay is a percentage of the gross wages you earned during that year of employment: 4% at two weeks, 6% at three, and 8% at four. This is the federal Code, which covers federally regulated employers rather than every Canadian workplace.
Does my overtime count towards vacation pay?
Yes. For vacation purposes wages include every form of payment for work performed, with tips and other gratuities the only stated exclusion. It is the most useful thing on the page. So overtime is inside the figure the percentage is taken from. Somebody on $60,000 of salary plus $20,000 of overtime gets 4% of $80,000, which is $3,200, against $2,308 for two weeks of base salary. That is 38.7% more, and it is worth 2.77 weeks of base pay rather than the two the entitlement is stated as.
Is 4% the same as two weeks?
No, it is slightly more, and every tier is like that. Two weeks out of 52 is 3.846% and the Code gives 4%. Three weeks is 5.769% against 6%, and four weeks is 7.692% against 8%. Each rate rounds up from the weeks it represents, so 4% is worth about 2.08 weeks of base pay. It is roughly half a day a year, which matters less than the principle: the two ways of stating the entitlement are not equivalent and the percentage is the better one.
Does this apply to every job in Canada?
No, and it is important. Part III of the Canada Labour Code applies to federally regulated employers: banking, telecommunications and broadcasting, interprovincial and international transport, ports and shipping, and federal Crown corporations. Most Canadian employees are covered by their own province or territory employment standards instead. Provincial minimums are broadly similar and are not all identical, so check which regime you are under before relying on these figures.
Can I save vacation up over several years?
No. Vacation must begin no later than 10 months after the end of the year of employment it relates to. That is a real difference from Australia, where annual leave accumulates with no statutory expiry at all and long-serving employees can be sitting on months of it. Canada makes you take it, broadly within the following year.
What happens to unused vacation pay when I leave?
Your employer must pay out vacation pay owed for any completed year of employment, and must do it within 30 days. Vacation pay is earned on the wages of a completed year, so it is money already accrued rather than a benefit you forfeit by resigning.
What is a year of employment?
Twelve consecutive months, starting either from your hire date, from any anniversary of it, or from another twelve month period your employer sets under the Canada Labour Standards Regulations. It matters twice over: you must complete one before the entitlement to take vacation arises, and the wages you earn during it are what the vacation pay percentage is calculated on.
Can a union agreement override this?
Only on two conditions together. A collective agreement can displace these requirements if it provides rights and benefits equal to or better than the Code and includes a provision for third party settlement of disputes. Both, not either. An agreement that is more generous but has no third-party dispute mechanism does not displace the Code.